The grocery giant said the tie-up will create “the UK’s leading food business” and deliver significant cost savings for the combined group.

Booker is the country’s largest wholesaler and owns the Londis and Budgens convenience store brands.

The companies said the deal would bring “benefits for consumers, independent retailers, caterers, small businesses, suppliers and colleagues, as well as delivering significant value to shareholders”.

Tesco shares jumped more than 10% in morning trading as investors welcomed the news.

Tesco chief executive Dave Lewis said: “This merger with Booker will further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital.

“Wherever food is prepared and eaten - ‘in home’ or ‘out of home’ - we will meet this opportunity with the widest choice and best service available.”

However, experts believe the deal will face regulatory scrutiny from the Competition and Markets Authority (CMA).

Independent retail analyst Nick Bubb said: “The CMA will have a field day with this, as although Tesco is mainly a retailer in the UK and Booker a wholesaler, Tesco does own the One Stop convenience store chain that competes with Booker’s interest in symbol groups and convenience store retailing.”